Cubs, Sinclair team up to launch regional sports network in 2020

Wednesday

CHICAGO — The Chicago Cubs are teaming with Sinclair Broadcast Group to launch a regional sports network in February 2020 that will become the exclusive television home of the Cubs.

The Marquee Sports Network will air the full regular season schedule, expanded pregame and postgame coverage, classic broadcasts from the archives and other local sports programming.

It marks the end of more than 70 years of over-the-air broadcasts for the Cubs, and the beginning of an ambitious endeavor to sell cable and satellite providers on the value of the carrying the new regional network — no sure thing in an increasingly fragmented world of cable TV.

But if all goes according to plan and cable providers from Southwest Michigan to Iowa — Major League Baseball’s designated home broadcast turf for the team — agree to carry the new network, viewers will have no choice but to watch local Cubs games on pay TV.

“We’ve been looking at this for a while,” said Crane Kenney, president of business operations for the Cubs. “We think the new network is going to give our fans unprecedented access and a richer, deeper connection to the team.”

Having their own channel will enable the Cubs to have all of their programming in one place, versus splitting the games between two broadcast stations — WGN-Ch.9 and WLS-Ch.7 — and sharing coverage with the Bulls, Blackhawks and White Sox on NBC Sports Chicago, formerly Comcast SportsNet, the regional sports network formed in 2004.

NBC Sports Chicago announced a multiyear media rights deal last month with the Bulls, Blackhawks and White Sox.

Change has been in the air for several years. The Cubs signed five-year deals with WGN and WLS after the 2014 season, with the plan of launching the regional sports network beginning in 2020. The team also ended its longtime national platform on WGN America after the 2014 season.

Part of the Cubs’ motivation is the potential of earning higher broadcast rights fees. “As those games come to cable, which is generally a more lucrative place for games to air, there’s an assumption that the team would benefit from that,” Kenney said.

But in the five years since the Cubs planted the seed of the regional sports network, the pay-TV landscape has changed dramatically, with cord cutting and skinny bundles squeezing the carriage fees cable companies are willing to pay for even sports, long the most valuable programming commodity.

That is where the Cubs’ partnership with Maryland-based Sinclair, the country’s largest TV station owner, comes into play. Sinclair owns 191 TV stations and the Tennis Channel, which gives it leverage in negotiations with cable and satellite providers such as Comcast, DirecTV and Dish.

Since acquiring the Tennis Channel in 2016 for $350 million, for example, Sinclair has doubled its reach to 60 million homes.

“We have strong relationships with cable companies and satellite operators,” said Sinclair’s president and CEO, Chris Ripley. “That is a key function we will fill here.”

Ripley expressed confidence in getting not only cable and satellite providers, but streaming services to sign up for the new Cubs network. Negotiations are underway, he said.

Bob Leib, a Wisconsin-based financial consultant to professional sports teams and owners, said sports broadcast rights continue to have value for teams, even as the media landscape shifts. The bottom line is viewers still want to watch the Cubs and most are willing to pay up to do so, he said.

“The fan subscriber’s insatiable demand for game programming creates a built in tolerance for price increases,” he said.

Live sports programming traditionally charges the highest fees on pay TV, led by ESPN, which received an average of $7.46 per subscriber per month last year, according to S&P Global Market Intelligence.

NBC Sports Chicago received about $4.20 per subscriber per month last year, ranking 10th among regional sports networks, according to S&P Global.

Both ESPN and NBC Sports Chicago are expected to increase their fees to cable providers this year.

Ripley did not provide a per subscriber fee target, but said the new Cubs network will charge a competitive price to cable providers, and ultimately subscribers.

“The Cubs perform at the top end in terms of ratings and loyalty fan base,” Ripley said. “They will always fetch premium pricing for premium programming, and the market will ultimately determine what that price will be.”

Neither Ripley nor Kenney would disclose the economics of the network partnership agreement, but both Sinclair and the Cubs have a significant stake in its success, they said.

The Cubs represent Sinclair’s first foray in a regional sports network. Sinclair is also kicking the tires at Fox, which is divesting its regional sports networks as a requirement of its pending merger with Disney.

Last year, Sinclair saw its proposed $3.9 billion deal to buy Chicago-based Tribune Media crumble under scrutiny by the Federal Communications Commission over potential “misrepresentation or lack of candor” in its application.

The broadcaster also generated a lot of pushback over its conservative-leaning local news product.

Ripley said the Cubs network should be much less controversial.

“This is a totally different strategy and genre,” he said. “It’s sports, not news, so there won’t be any politics around this.”

Launching a sports network could provide a big return for the Cubs and Sinclair, but it’s not without its risks.

The Los Angeles Dodgers provide a cautionary tale with their own network, launched in 2014 with Time Warner Cable. SportsNet LA has paid off big for the team, earning a reported $8.35 billion over 25 years. But it remains unavailable in most Los Angeles homes after most cable and satellite providers balked over higher over carriage fees. Charter Communications bought Time Warner Cable in 2016.

Still, cable providers need good programming, said Marc Ganis, president of Sportscorp, a Chicago-based sports consulting firm. “They desperately need compelling content to limit cord cutting,” he said. “Live sports generally and the Cubs specifically are vitally important in the effort to stop the bleeding of subscribers and remain relevant as delivery systems change.”

Kenney expressed confidence that Cubs fans will still have plenty of ways to watch the team.

“We expect to have more distribution with the new network than we have today,” Kenney said. “We feel pretty confident about the desire for our product.”